Sunday, March 9, 2014
AUGUSTA - Ten Maine public employees took in an average of $168,000 each last year by collecting a salary and a state retirement pension at the same time, data from the Maine Public Employees Retirement System shows.
The 10 -- including seven school superintendents and one assistant superintendent -- top the list of Maine's so-called double dippers, a group that is once again drawing the attention of state lawmakers.
In all, there were 1,228 Mainers working for the state and for local school districts while also collecting their Maine state pensions in 2011, the state data shows. These do not include public-sector employees now collecting salaries from 488 municipalities while also collecting benefits from the state pension program.
Some, including all of the top 10 earners, never actually stopped working. They simply retired for one day and then returned to work.
Others left jobs but returned to work years later for financial or other reasons.
Most of the double dippers -- 86 percent -- work for Maine school districts, which employ most of the state's public work force. They range from experienced superintendents, who remain in high demand, to retired teachers who fill in as substitutes.
The rest work in state government.
The practice is not new, but it has come under increased scrutiny in Maine and other states at a time when unemployment is high and many in the private sector have seen their retirement accounts dwindle.
"It looks bad to taxpayers," said Ron Snell, a public pension expert with the National Conference of State Legislatures. "It looks bad to people on Social Security."
Defenders of the practice say it keeps experienced and skilled employees in the work force. And because the state no longer has to make retirement contributions for someone who is technically retired, retirees are a bargain, they say.
Critics, however, say some public employees take advantage of the system to get a hefty raise and that the practice clogs the career ladder for younger workers, particularly at a time when jobs are scarce.
"We clearly are interested in preserving institutional memory, but we're also equally concerned, and are hearing more complaints about, double-dipping abuse," said Sawin Millett, commissioner of the state Department of Administrative and Financial Services.
Millett, the state's 74-year-old chief budget officer, is himself on the list of double dippers.
He has served in multiple administrations and in the Legislature, and officially retired in 2000 at age 62. Last year, Millett earned a $101,215 salary as part of the LePage administration while also collecting $24,951 in pension benefits, according to the retirement system data.
The LePage administration backed return-to-work restrictions that took effect last fall, including a new limit on incomes for workers who also are receiving pensions. Now, however, the Legislature is considering loosening those restrictions for teachers and state employees.
MaineToday Media obtained pension and salary records from the state retirement system through a Freedom of Access Act request. An analysis of the data shows that:
• Ninety-seven of those on the list made more than $100,000 in combined pension and income in 2011.
• The average pension is $31,068 a year.
• The average pay was $20,828 a year.
• Portland's school department, the state's largest district, employs 45 retired workers, the most for any one employer.
Municipal workers who are collecting state pensions are considered a different category, and are not included in those numbers. The practice is not uncommon in cities and towns, however.
Portland Fire Chief Fred Lamontagne, for example, began collecting his pension in June 2010 and receives $47,376 a year in state pension benefits, along with a city salary of $96,907, according to state and city records.
Deputy Chief Stephen Smith retired in 2008 and receives $58,812 a year in state pension benefits, along with a city salary of $72,420.
William Braun, the superintendent of School Administrative District 48 in Newport, is one of the top earners on the state's list of working retirees. He took in $202,572 in combined salary and pension benefits last year, according to the data.
Braun said criticism of double dippers, and superintendents in particular, is unfair.
"It's a savings account, basically. The employee put those dollars into the retirement system," he said. "If I had an IRA or some other plan, would someone be complaining if I started collecting from that?"
Public employees do contribute to their pensions -- 7.65 percent of their salaries. The state also contributes, however, and it covers the pension plan's stock market losses so it can guarantee the benefits and pay cost-of-living increases.
SUPERINTENDENT SHORTAGE CITED
The double-dipping issue is now getting another review in Maine's Legislature, following the introduction of a bill by Sen. Dawn Hill, D-Cape Neddick.
Maine's current law took effect in September and limits the salaries of retirees who return to work to 75 percent of what the positions would otherwise pay. It also limits their post-retirement service to five additional years, and prevents retirees who return to work from getting health insurance. The law affects anyone who retired after Sept. 1 last year, although substitute teachers are exempt from the limits.
As currently written, Hill's measure would lift the restrictions instituted last year on some public employees. However, it would not change the limits for school superintendents, who have more flexibililty to negotiate salaries than do teachers and state workers, according to supporters of the bill.
The bill, L.D. 1632, is pending before the Appropriations Committee, and is still subject to amendment.
While lawmakers said the original law was intended to target superintendents, the Maine Education Association says teachers and educational technicians have been hurt the most by the new restrictions.
"Don't discriminate against some 65-year-old teacher who has to go back to work," said Chris Galgay, president of the union.
The Maine School Superintendents Association, meanwhile, says the law is crimping an already tight supply of qualified superintendents.
There are about 15 superintendent openings around the state right now, and many districts are getting fewer than 10 applicants, mostly from people with no prior experience as a superintendent, said Sandra MacArthur, deputy executive director of the Maine School Management Association.
"We have a hard time getting people to sign up on an interim (superintendent) list because they'll make 75 percent," she said.
Braun, the Newport superintendent, said Maine school chiefs will now seek work in other states, where they can collect their Maine pensions and find higher salaries than those offered here. "You're going to have an exit of people in a certain age group who retire in this state and go to another state," he said.
The people who hire retirees say they get experienced people who actually cost the state less than hiring someone else at the same salary.
That's because the state no longer makes pension contributions for retirees and doesn't have to pay for health insurance, which retirees get elsewhere.
Braun's boss, SAD 48 School Board Chairman Dan Costain, said the board wanted to keep Braun on active service, even though he planned to retire a few years ago. Braun routinely works 60 to 70 hours a week, juggles state and federal regulations, and manages a budget of more than $20 million a year, he said.
"He was doing a great job for us," he said. "He retired and we allowed him to come back. He retired one day and returned the next day."
Norman "Kenneth" Smith, superintendent in Millinocket, said double dipping has been a recurring complaint at least since 1991, when he retired at age 53. He received a combined $141,471 in 2011 in salary and pension benefits.
Smith actually stayed retired for eight years before going back to work for school departments in need of experienced superintendents.
"There's a feeling on the part of some people that 'let's give these young people a chance,'" Smith said. "The reality is there aren't enough people with any experience."
He said he understands why it doesn't look good for public officials to retire one day and go back to work the next. "Frankly, I think there should be a little hiatus between the two."
But, Smith said, those who do retire and go back to work are not getting anything they haven't earned.
"That's my money. If I want to sit on it, I can sit on it. Or if I want to work, I can go to work," he said. "Eventually, you're going to get the money. You've earned it."
Smith said he has hired back retirees who found they could no longer cover their property taxes or other expenses.
He also recently convinced a highly valued school principal to stay on for another year after she retired.
"It's a heck of a deal for a district," Smith said.
School districts don't contribute to their employees' retirement -- the state does that -- but they do spend less on health insurance when they hire a retiree, superintendents said.
TIGHTENING RETURN-TO-WORK RULES
Public employee retirement benefits have been hot topics nationwide in recent years, in part because of a growing sense of "pension envy," said Steven Sass, program director for the Center for Retirement Research at Boston College.
"State workers are one of the very few with defined-benefit pensions," he said. "People with secure defined-benefit pensions are considered a lucky group."
In a defined-benefit system, the retirement benefit is guaranteed, and the employer assumes the investment risk if the market drops, as it did in 2008.
Maine's retirement system works something like Social Security. In fact, it replaces it. Unlike in some states, Maine's public employees do not get Social Security benefits.
Maine state employees and school workers pay into the system while they are working, and the state pays the employer's contribution.
There are no restrictions to keep state retirees from returning to work, even in the same job. Workers have benefits reduced if they retire early, however, and their pensions stop building as soon as they retire, even if they go back to work for many years.
Private-sector retirees collecting Social Security also can return to work with no penalty, as long as they have reached their retirement age.
Private workers also can collect reduced Social Security benefits if they retire early. If they return to work before reaching their retirement age, however, a portion of the money is held back until the person reaches full retirement age.
Snell, the national pension expert, said a dozen states have changed their return-to-work rules since 2010, with most of them putting in place more restrictions. Snell said he wasn't aware of any states that prohibit it, and he said that if any do, they would be an exception.
In Michigan, for example, workers who return to service may keep pension and health benefits only if they earn less than one-third of what they were earning before they retired. If they earn more than one-third of their pre-retirement income, their pension and health care benefits are suspended until they stop working.
And in South Dakota, workers lose all retirement benefits if they return to work sooner than three months after retirement. After three months, their retirement benefits are reduced by 15 percent.
"The major theme has been the general sense in the public that it is just not desirable to have somebody collect a pension and collect a salary," Snell said.
At the same time, he said, "If you view a pension as deferred compensation, this is money the person has earned."
MaineToday Media State House Writer Susan Cover can be contacted at 620-7015 or at:
MaineToday Media State House Writer John Richardson can be contacted at 620-7016 or at: